1 / 20

Financial Management Fundamentals for Business Success

Explore key financial areas such as corporate finance, investments, and financial institutions in this comprehensive course. Learn about financial management decisions, forms of business organization, and the role of financial managers.

dheard
Download Presentation

Financial Management Fundamentals for Business Success

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Welcome! FIN 335 – Principles of Financial Management Clay M. Moffett, Ph.D. Cameron 220 O moffettc@uncw.edu

  2. Stuff…. • Intro • Who’s Who… • Syllabus: • Grading • Attendance • Homework • Bonus Points • Contacting moi…. • Chapter 1?

  3. Chapter 1 Introduction to Financial Management

  4. Basic Areas Of Finance • Corporate finance • Investments • Financial institutions • International finance

  5. Investments • Work with financial assets such as stocks and bonds • Value of financial assets, risk versus return, and asset allocation • Job opportunities • Stockbroker or financial advisor • Portfolio manager • Security analyst

  6. Financial Institutions • Companies that specialize in financial matters • Banks – commercial and investment, credit unions, savings and loans • Insurance companies • Brokerage firms • Job opportunities

  7. International Finance • This is an area of specialization within each of the areas discussed so far • It may allow you to work in other countries or at least travel on a regular basis • Need to be familiar with exchange rates and political risk • Need to understand the customs of other countries; speaking a foreign language fluently is also helpful

  8. Why Study Finance? • Marketing • Budgets, marketing research, marketing financial products • Accounting • Dual accounting and finance function, preparation of financial statements • Management • Strategic thinking, job performance, profitability • Personal finance • Budgeting, retirement planning, college planning, day-to-day cash flow issues

  9. Business Finance • Some important questions that are answered using finance • What long-term investments should the firm take on? • Where will we get the long-term financing to pay for the investments? • How will we manage the everyday financial activities of the firm?

  10. Financial Manager • Financial managers try to answer some, or all, of these questions • The top financial manager within a firm is usually the Chief Financial Officer (CFO) • Treasurer – oversees cash management, credit management, capital expenditures, and financial planning • Controller – oversees taxes, cost accounting, financial accounting, and data processing

  11. Financial Management Decisions • Capital budgeting • What long-term investments or projects should the business take on? • Capital structure • How should we pay for our assets? • Should we use debt or equity? • Working capital management • How do we manage the day-to-day finances of the firm?

  12. Forms of Business Organization • Three major forms in the United States • Sole proprietorship • Partnership • General • Limited • Corporation • S-Corp • Limited liability company

  13. Disadvantages Limited to life of owner Equity capital limited to owner’s personal wealth Unlimited liability Difficult to sell ownership interest Sole Proprietorship • Advantages • Easiest to start • Least regulated • Single owner keeps all of the profits • Taxed once as personal income

  14. Disadvantages Liability General partnership Limited partnership Partnership dissolves when one partner dies or wishes to sell Difficult to transfer ownership Partnership • Advantages • Two or more owners • More capital available • Relatively easy to start • Income taxed once as personal income

  15. Disadvantages Separation of ownership and management (agency problem) Double taxation Corporation • Advantages • Limited liability • Unlimited life • Separation of ownership and management • Transfer of ownership is easy • Easier to raise capital

  16. Goal Of Financial Management • What should be the goal of a corporation? • Maximize profit? • Minimize costs? • Maximize market share? • Maximize the current value of the company’s stock? • Does this mean we should do anything and everything to maximize owner wealth? • Sarbanes-Oxley Act

  17. The Agency Problem • Agency relationship • Principal hires an agent to represent its interests • Stockholders (principals) hire managers (agents) to run the company • Agency problem • Conflict of interest between principal and agent • Management goals and agency costs

  18. Managing Managers • Managerial compensation • Incentives can be used to align management and stockholder interests • The incentives need to be structured carefully to make sure that they achieve their goal • Corporate control • The threat of a takeover may result in better management • Other stakeholders

  19. Financial Markets • Cash flows to the firm • Primary vs. secondary markets • Dealer vs. auction markets • Listed vs. over-the-counter securities • NYSE • NASDAQ

  20. Quick Quiz • What are the four basic areas of finance? • What are the three types of financial management decisions, and what questions are they designed to answer? • What are the three major forms of business organization? • What is the goal of financial management? • What are agency problems, and why do they exist within a corporation?

More Related